The ecosystem of complementary currencies!


When speaking about complementary currencies, a number of overlapping and often interchangeable terms are in use. In this post, we organize the diverse and fascinating ecosystem of complementary currencies. We focus on why and how complementary currencies are built. 


Currency, in the most specific sense, is money in any form when in use or circulation as a medium of exchange. Currency has taken different forms throughout history.

In many early societies, certain commodities became a standard method of payment. Circulating notes and coins have become a very popular and essential medium for our daily transactions. More recently, technology has enabled an entirely different form of payment: electronic or digital currency.

Currency is just a form of money.

Official currencies

Official currencies are legal tender in certain political jurisdictions: a form of money (monetary units) in common use in a specific nation or monetary region (e.g. Eurozone). By law, they are a means to settle public or private debt and meet financial obligations within a particular territory.

National or official currencies in this sense are defined by governments with limited boundaries of acceptance. Under this definition, U.S. dollars (US$), euros (€), and Japanese yen (¥), are examples of official currencies. They are recognized as stores of value and traded in foreign exchange markets, which determine the relative value of each currency.

180 : the number of official currencies recognized by the United Nations.

Complementary currencies

Complementary currencies are a medium of exchange that supplements or complements the official currency. They are typically not legal tender. Their use is based on a private agreement or consensus between the parties exchanging the currency.

Sometimes they are also called alternative currencies, in particular when they intend to create an alternative and different monetary framework. In that case, they are more ambitious politically, competing and directly opposing the national monetary system.

In recent years, the number of complementary currencies has risen sharply worldwide resulting in a very diverse and complex ecosystem. They can range from an informal and temporary currency for school markets to a global financial enterprise like Bitcoin. We will therefore organize them based on some general characteristics that differentiate them.

There are no official statistics of complementary currencies. Including loyalty and cryptocurrencies we are talking about a few hundreds of thousands worldwide, most stories without any insignificant impact.

Special-purpose money

National currencies respond to national agendas and national monetary policies. Complementary currencies, on the contrary, are created for a particular purpose or agenda. They are often called "special-purpose money". Here are some examples of common agendas or motivations of complementary currencies. 


A branded currency (sometimes called loyalty currency) is a store of value and a medium of exchange issued by businesses to purchase goods and services from a specific brand to which the currency is tied. This includes any physical or digital form of payment such as coupons, loyalty points, gift cards, or a specific amount of store credit.

Community exchange

Community currencies refer to those mediums created to facilitate the exchange of goods and services between members of a specific community. They connect people and/or businesses within a specific geographic area or for a specific online or virtual community.  Some well-illustrated examples are timebanks, LETS, business barters, etc.

Buy Local

A local currency is issued for spending only at participating businesses or organizations within a particular geographical locality. They aim to promote local commerce and directly channel local purchasing power. A regional currency is a form of local currency encompassing a larger geographical area. Popular mediums are vouchers, gift cards, digital wallets or e-money. 


Incentive currencies are used to encourage or persuade people to do something or to behave accordingly, based on some monetary reward that can be exchanged for certain assets. Ecocurrencies are earned through ecological actions. Social currencies reward volunteering or social work. Health currencies aim to give value to actions that promote people´´ s health. 


Investment currencies are mostly virtual currencies, issued and controlled by their developers. They are traded for national currencies in secondary markets. Eventually, some may be used to purchase certain goods and services.  Mostly, they are just a store of value or investment waiting to be converted back to official currencies at a favorable conversion rate in the future (speculative). 

Special-purpose money rewards certain behavior or actions that the issuers of the currency want to promote.   


Complementary currencies can practically be issued by anyone as long it is based on private and voluntary participation. Who owns and controls the network, acts as the "central banker", and assumes risks, losses, or profits, is very important for governance and acceptance.  We discuss briefly 3 forms of ownership though many currencies have a mixed structure. 


A business or group of businesses can issue a complementary currency. Corporate currencies tend to serve and protect business interests and are part of a profitable business model.  Sustainability and decision-making will be determined mostly by the impact on corporate sales and profits. Corporate-owned currencies can be more easily transferred to third parties. 


Complementary currencies can have more participatory ownership in civil society. They can be issued by a group of people, or by a formal organization (associations, foundations, cooperatives, ...). Social currencies will strive for more social impact and reinvest resources in the community. Participatory ownership can make governance and decision-making more complex. 


Local and regional governments can issue currencies to promote social and economic agendas. There are a few interesting cases where governments own or co-participate in a successful complementary currency. Government-owned currencies can be sensitive to political agendas and election results. 

For all types of ownership of complementary currency, most cases ended up in failure, though there are also interesting success stories.

Currency backing

National currencies are fiat money. They are not backed by any physical commodity and do not have significant intrinsic value or use-value. They obtain their value simply because the government legislates and regulates the use of it. Complementary currencies can be issued with or without real backing. Some common backing types are:

Mutual-credit currency

Mutual credit implies that creditors and debtors are the same people lending to each other. Normally internal loans are granted by the administration, however, all participants are responsible for the liabilities of others. Debts are paid off by delivering goods and services to other members. Examples are time banks, LETS, multilateral barter, etc.

Commodity-backed currency

Some complementary currencies are backed by goods and/or services of a business or a group of businesses. They represent something of real value supporting the face value, avoid cash expenses for the issuer and eventually promote extra sales. A practical example are branded or loyalty currencies.

Fiat-backed currency

In this case, the complementary currency is totally backed by an official or national currency. They aim to channel the circulation of the official currency in a specific network by retaining it and substituting it with a currency that has a more specific use. Because of their backing and convertibility, these currencies are likely to be seen or accepted as legal tender.

Loan-backed currency

Local financial institutions can issue loans to customers or target groups with complementary currency. The currency is used for and circulates only within a network of associated businesses and participants. Debtors need to pay back the loan to the financial institution with complementary or official currency.

Government-backed currency

Public authorities can issue currencies for certain economic development programs or deliver social transfers more efficiently and more focussed. These currencies are usually easily accepted since they are backed by government funding or can be used to pay local taxes.

Trust-based currency

Peer-to-Peer-Currencies are a form of backing used by many cryptocurrencies. They derive their value exclusively from the participants' trust. Without any form of backing, they need to be screened carefully for fraud, inflation, and speculation, in particular when there is nothing legally guaranteed that holders can claim. 

A currency without formal backing has its value based exclusively on trust. Today, even official currencies have no full backing by a national reserve in gold or other international currencies.   


A complementary currency is issued by a group of actors, for a special purpose and for a particular group of users. The flow is basically designed by who issues, who can receive, and who does accept the currency. 


Most likely, the issuer is the owner of the complementary currency. The circulation of the currency is defined by the group of participants or users that receives the currency and by where they can spend the currency. 

Participants can be individuals, businesses, organizations, or even governmental entities.  A lot of different combinations and models are possible. Here are a few commonly used models:   

  • C2C: Customers or individuals receive currencies and can trade directly with each other as in timebanks;
  • C2B: Customers or individuals receive currencies and spend them at participating businesses or organizations like loyalty currencies, local and nudging currencies;
  • B2B: Commercial transactions are conducted between one business and another as in multilateral business barter networks;
  • P2P:  Decentralized interactions among individuals and groups (peer-to-peer) without a central authority as used by cryptocurrencies. 

Target groups

For some currencies participation is very open: any person, organization, or business that fulfills some basic criteria can register and participate. However, most models are more exclusive and targeted to specific social-demographic groups or particular business categories. Participation will probably depend on the admission by the currency administrator. 

The model and specific segmentation of target groups make the ecosystem of complementary currencies a very diversified and fascinating phenomenon. The definition of target groups will also influence largely the selection of the most appropriate technology.

Complementary currencies organized by civil society actores and used to serve the interest of communities are also called "people-money". 


Today multiple technologies are available to implement and manage a complementary currency. While they used to be exclusively physical until some years ago, nowadays 9 out of 10 complementary currencies are born digital. 

Physical currencies 

In a world where we are running out of cash and where the privacy of personal information is highly valued, physical currencies will probably regain attention. They make a currency tangible and tend to create more community identity. Physical currencies are anonymous, work totally offline, and are free of transaction costs. 

  • Tokens: Any object that is given a monetary value by agreement. Most tokens used are coins-like but with some creativity a lot is possible.  
  • Vouchers: Paper notes are commonly used for complementary currencies. Some are transformed into authentic pieces of community art. 

Blessed with many benefits, physical currencies can also be exposed to counterfeiting and theft more easily. Since transactions are not registered it is hard to measure impact.  

Digital currencies

Modern digital technology has definitely facilitated the creation, circulation, and administration of complementary currencies. But they have also brought important risks and dependence on software solutions and third parties. Here are a few overlapping digital currency terminologies:

   Digital currency

Digital currency (or electronic currency), is a broad spectrum of currencies. Technically it is any value that is a balance or a record stored in a distributed database on the Internet, in an electronic computer database, within digital files, or within a stored-value card.

   Mobile currency

A mobile currency can be any digital currency that can be received, stored, spent, and sent using a mobile phone. Low-end technologies include SMS or USSD payments, while high-end mobile wallets run mostly on smartphone apps or software.


Cryptocurrencies are digital currencies that use cryptography technology to secure transaction records, control the creation of coins, and verify the transfer of ownership. When implemented with decentralized control (Peer-to-Peer) they work with distributed ledger technology, typically a blockchain, that serves as a public transaction database.

Some sources report over 20 thousand cryptocurrencies in circulation, with a very large portion of insignificant cases.

Key takeaways

The phenomenon of complementary currencies and special-purpose money is not new, nor just a fashion. They have been there in some way since monetary economies exist. 

Complementary currencies focus on community building around a special purpose, for certain targeted groups within a geographic area, or for a virtual online community. 

They should not be generalized based on one particular characteristic (e.g. crypto technology) but analyzed and compared on a set of common characteristics.  

The type of currency you use for a particular transaction defines actually the nature of the relationship you decide to nurture with the beneficiary.  

While digital fiat payments are efficient but corporate and cold, payments made in special-purpose money search to establish a closer and cooperative relationship. 

By: Koen De Beer. CEO at MONEI LAB, a fintech and knowledge center for financial inclusion and complementary currencies.

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